Silence on payroll tax a big mistake, says business

by 12 May 2009

The Government’s silence on the issue of payroll tax in its Federal Budget is a big mistake and will detract from the capacity of the budget to reduce rising unemployment, according to Peter Anderson, CEO of the Australian Chamber of Commerce and Industry (ACCI).

“It’s not a tax that is relevant to the 21st century and certainly not a tax that’s helpful when we have a recession that is fuelling rising unemployment,” said Anderson. “The Budget has not delivered any payroll tax relief to the private sector.”

It has been argued that payroll tax acts as a strong disincentive for small and medium size businesses to employ more workers.

“A recent example was a restaurant business that employed 15 people, and then when they hired five new people, the business incurred a hefty payroll tax bill that required further borrowing and further overdraft and interest payments,” said Anderson. “That business is now scratching its head as to why it chose to give five young Australians the chance of a job in their business.”

The NSW Business Chamber, which has been calling on the Government for a 50 per cent payroll tax holiday for the next financial year, expressed its disappointment in the budget on the issue.

“While the investments in infrastructure and the extra tax concessions for small businesses are welcomed,” said Paul Orton, director membership and policy, NSW Business Chamber, “payroll tax still remains a big issue for small and medium businesses and will not encourage employment which is needed in the current environment.”


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